Ottawa home prices and sales continued to decline in January as potential buyers remain “cautious” about entering the market amid rising interest rates, the Ottawa Real Estate Board says.
The average price for a freehold-class property in Ottawa was $676,272 in January, the board said, down 12 per cent from a year earlier. The average condominium sold for $412,244, a decrease of eight per cent from January 2022.
OREB members sold 606 residential properties last month, down from 933 in January 2022. It’s the 11th month in a row that home sales have declined in the capital, following a 30 per cent drop in December and a 42 per cent fall in November.
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Last month’s figures suggest the market has not yet bottomed out following a year that saw home sales fall 25 per cent compared with 2021 and total sales volumes drop to $10.5 billion from $13 billion the previous year.
“January’s marked slowdown in unit sales over 2022 indicates potential homebuyers are taking their time,” OREB president Ken Dekker said in a news release.
“While last month saw the culmination of the succession of interest rate hikes announced by the Bank of Canada, affordability remains a factor. (Buyers) may be waiting for a shift in listing prices. They’re being cautious in uncertain conditions.”
Falling prices have largely been attributed to rising interest rates, which tend to move in tandem with mortgage rates and weigh on homebuyer sentiment.
With the Bank of Canada hiking the interest rate eight times in the last year alone, potential sellers have left their homes off the market, while buyers have sat waiting for prices to hit their bottom.
But Dekker said he remains optimistic about the trajectory of Ottawa’s housing market for the rest of 2023.
“Despite the decrease in average prices, the market should not be considered on a downward slide,” he said. “A hyper COVID-19 seller’s market is now levelling out to our current balanced market state.
“On a positive note, in comparison to December’s figures, January’s average price of freehold properties increased by three per cent. The average price of condos did fall by five per cent compared to December, but condo pricing tends to fluctuate more due to the small data set.”
As sales have declined over the past year, inventory has gradually risen.
That trend continued in the freehold segment in January, as the supply of housing increased to 3.8 months, up from 3.7 months in December. The condo market showed a slightly lower inventory in January at 3.8 months’ worth of supply, down from 3.9 months the previous month.
Both totals are up significantly from a year earlier, when there was 0.9 months’ inventory of freehold homes and 0.8 months’ worth of condo supply.
“Ottawa’s inventory and days on market figures are typical for a balanced market and another sign that buyers are no longer racing to put in an offer,” Dekker said.
– With additional reporting from the Canadian Press